![](\"https:\/\/www.financialmirror.com\/wp-content\/uploads\/2024\/01\/oanda-marketpulse-craig-us-economy.jpg\")
<\/p>\n<\/p>\n
By Craig Erlam\u00a0\u00a0<\/strong><\/em><\/p>\n US economic data was surprisingly strong on Wednesday, with both the services and manufacturing PMIs comfortably exceeding expectations and reinforcing the message that the economy is in good shape, even getting better.<\/p>\n Of course, these are just surveys and can be volatile, but the fact that both jumped as much as they did and both are now in growth territory is very promising. However, it may be slightly concerning for the Federal Reserve if it is concerned about the strength of demand.<\/p>\n The Bank of Canada left interest rates unchanged at the January meeting and signalled it isn\u2019t yet ready to consider rate cuts.<\/p>\n That\u2019s aligned with the message we\u2019re getting from other central banks but also what is to be expected until policymakers are absolutely convinced it won\u2019t backfire, at which point they\u2019ll probably start cutting quite quickly.<\/p>\n The stickiness of core inflation is clearly the key issue here as it and the headline figures are only a little above target. The difference is that progress appears to have stalled which will naturally make policymakers nervous.<\/p>\n Markets now expect a rate cut later in the second quarter to allow time for it to fall further and only 100 basis points in total this year.<\/p>\n The data from the eurozone isn\u2019t improving early in the new year, with the latest PMI surveys all remaining firmly in contraction territory.<\/p>\n While we continue to see improvements in the manufacturing survey, that comes from a very low base and still some way from the 50 threshold that separates growth from contraction. And it doesn\u2019t appear on course to breach that threshold any time soon.<\/p>\n The services sector is arguably more problematic, as it\u2019s a far more important segment of the economy and it\u2019s showing little sign of recovering.<\/p>\n This may aid the case for the ECB to consider cutting rates in the coming months if demand remains soft and the economy is either in or on the brink of recession.<\/p>\n But we\u2019ll need to see more evidence of that over the next six weeks to make March a live prospect. Assuming, of course, inflation doesn\u2019t enable that all on its own.<\/p>\n Oil prices continue to consolidate, with Brent crude now trading not too far from $80 a barrel, but also not looking like imminently bursting higher.<\/p>\n Geopolitical risk and the threat of delays and disruption are causing some alarm, but that\u2019s not being particularly reflected in the price at this stage.<\/p>\n That the market is pulling back less and less in recent weeks could be indicative of traders becoming more apprehensive, but it\u2019s not clear whether that will translate to higher prices and if so, to what extent.<\/p>\n Gold has been quite choppy over the last four sessions, but ultimately hasn\u2019t moved very far.<\/p>\n It continues to trade above $2,000, perhaps a sign that traders remain confident that central banks will be forced to cut rates soon and on multiple occasions throughout the year.<\/p>\n But that is far from certain at this point and its resilience above here may be tested over the coming weeks if the data doesn\u2019t deliver, as it did in the final couple of months of last year.<\/p>\n Bitcoin is trading just below $40,000 and testing it as a potential new area of resistance having broken below here only a couple of days.<\/p>\n That was a big psychological blow and a move straight back above could go some way to repairing the damage.<\/p>\n A failure on the other hand could reinforce the initial bearish signal.<\/p>\n \u200b<\/p>\n Craig Erlam is Senior Market Analyst, UK & EMEA at OANDA<\/p>\n Opinions are the author\u2019s, not necessarily that of OANDA Global Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. Losses can exceed investments.<\/p>\n","protected":false},"excerpt":{"rendered":" The US economic data, including the services and manufacturing PMIs, exceeded expectations and indicated that the economy is in good shape. The Bank of Canada is cautious about rate cuts, while the eurozone’s data shows a weak economy that could lead to rate cuts by the ECB. Oil prices are consolidating, gold is holding above ,000, and bitcoin is testing a potential new area of resistance.<\/p>\n","protected":false},"author":4,"featured_media":2313,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[4],"tags":[122,533,77,359,49,80,50,534,26,52,308,53,67,34,55,375,535,494,380,536,255,18],"class_list":["post-2312","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cyprus","tag-aid","tag-bank-of-canada","tag-bitcoin","tag-brent","tag-crude-oil","tag-crypto","tag-ecb","tag-ecb-rate-cut","tag-economy","tag-federal-reserve","tag-geopolitical","tag-gold","tag-inflation","tag-markets","tag-oanda","tag-rate-cut","tag-stock-markets","tag-uk","tag-us","tag-us-pmi","tag-wall-street","tag-world"],"acf":{"keyphrase":"","keywords":"","sourceimg":"","country-category":""},"yoast_head":"\nBoC cautious on rate cut talk<\/h4>\n
Weak economy could aid ECB on rate cuts<\/h4>\n
Oil consolidation continues<\/h4>\n
Gold holding above $2,000<\/h4>\n
Potential bearish reinforcement in bitcoin<\/h4>\n